Anglo American plans break-up to thwart £34bn BHP bid

Anglo American plans to thwart BHP’s £34bn takeover bid by breaking itself up, with chief executive Duncan Wanblad making his pitch to shareholders and South African President Cyril Ramaphosa.

Wanblad told the Financial Times he had a “long” meeting with Ramaphosa as Anglo sought to rebuff a proposed acquisition by the Australian mining company. Ramaphosa’s office declined to comment.

London-listed Anglo, founded in South Africa more than a century ago, said on Tuesday that it would hive off its De Beers diamond business, its South Africa-based Anglo American Platinum (Amplats) operation and its coking coal assets. Anglo will refocus on its copper, iron ore and crop nutrients businesses.

Wanblad vowed to stick to the new strategy even if BHP took its offer directly to Anglo’s shareholders. “We have the best capabilities and therefore this is better in the interests of the shareholders irrespective of whether they go hostile or not,” he said.

The Anglo chief executive had been under pressure to set out the company’s future as a standalone group after rebuffing two preliminary offers from BHP, the world’s biggest miner.

“These actions represent the most radical changes to Anglo American in decades,” he said.

The 107-year-old company was “going to be extremely highly valued” by the end of 2025 when the restructuring was complete, he said earlier in a media call. “To the extent that anybody wants to buy us at that particular point in time, they are going to have to pay an enormous amount of money for it.”

But BHP chief executive Mike Henry said that Anglo shareholders needed to “consider how confident they are in the delivery of value from that plan, their timetable and the execution risks”.

Speaking in Miami at an industry conference, Henry said the Anglo plan was simply a “variant” of his own, which requires Anglo to spin off certain assets before being acquired. Both companies see the biggest value in Anglo’s copper business, which is expected to boom as the world decarbonises.

However, Wanblad attempted to set his vision apart from BHP’s takeover proposal by keeping a foot in South Africa by holding on to Kumba Iron Ore, which BHP wants spun off.

“We remain in South Africa — that is an important point. BHP does not remain in South Africa. They exit. They make us do the work and off they go,” said Wanblad.

Shares in Anglo fell 1.4 per cent to £27.45. BHP’s latest all-share offer valued Anglo at about £27.53, up from approximately £25 in its original bid. BHP shares were up 3 per cent.

South African mining minister Gwede Mantashe told the FT that he would prefer Anglo’s restructuring plan over a BHP-driven split and takeover. South African state entity Public Investment Corporation is the second-largest shareholder in Anglo.

“I am happy with the rejection of the BHP deal and I hope it will continue, then Anglo can restructure itself to optimise value for shareholders,” Mantashe said.

Anglo also said it would pull back on spending on Woodsmith, a flagship project in the UK designed to create a vast underground mine producing a yet-unproven fertiliser. Instead of spending $1bn a year to build the mine by 2027, only $200mn will be spent next year and nothing in 2026.

“It’s a very balanced proposal and it makes a lot of sense,” said a top-10 shareholder in Anglo. “It’s a clear attempt by management to set the business up for success by focusing on a smaller number of things where they clearly have a competitive advantage with their assets.”

However, the investor cautioned that “we shouldn’t underestimate the execution difficulties”.